Why is the Industrial Relations Court failing workers?

November 15, 2017

Labour Day protests often feature calls to disband the Industrial Relations Court. Photo by M Agung Rajasa for Antara.

Every International Labour Day, workers across Indonesia conduct major protests against outsourcing, low wages, and workforce liberalisation policies. This is perhaps to be expected but more surprising are the calls in recent years for the Industrial Relations Court to be closed down.

When it was established back in 2004, this new judicial institution was intended to protect labour rights in line with liberalisation policies introduced by Law No. 13 of 2003 on Labour. As a result, the Industrial Relations Court’s main function is to rule on disputes between workers and employers, including rights, interests, dismissal and union disputes.

Most scholars saw the court as the best way to resolve labour disputes, and hoped it would provide greater legal certainty for workers than they had under Soeharto’s New Order. Indeed, in its early days, there were few demonstrations against the statute that established the court, Law No. 2 of 2004 on Industrial Relations Dispute Resolution, or legal challenges to its validity.

But the political design of the Industrial Relations Court has unfortunately resulted in the court too often prioritising the interests of business owners and the free market. It has marginalised the role of the state in protecting workers’ rights, and that means workers are often left on their own to battle it out with their (usually far more powerful) employers.

As a result, a decade since the court was established, efforts to dissolve it are now growing. The House of Representatives (DPR), for example, has placed a planned amendment of the Industrial Relations Dispute Resolution Law on its list of priority bills for deliberation (Prolegnas), although there is still no draft available.

During recent public consultations conducted by the DPR’s Commission IX (which oversees labour issues), an alliance of labour unions calling itself the Commission for the Disbandment of the Industrial Relations Court (Komisi Bubarkan PHI), proposed dissolving the court and replacing it with an entirely new commission that would give the state a greater role. They say the main problem with the Industrial Relations Court is that it puts workers in a much weaker position than the corporations that employ them.

For example, taking a case to the court requires workers to at least have basic knowledge of civil procedure and familiarity with the formalities of the legal system. Few, if any, workers have the specialised legal skills required, and finding someone who does have them, and can represent the workers in court, is difficult and expensive. And often, it still not enough. Jazuli, a representative for members of the Alliance of Workers’ Struggle in East Java, argues, for example, that even when workers can afford to be represented by lawyers, judges still often reject their claims.

Another problem is that it is difficult for labour unions to represent their members, because the courts often impose strict limits on representation. Law No. 18 of 2003 on Advocates stipulates that people defending a case must have an advocate’s certificate or be a member of the legal profession. Unions are therefore usually unable to defend their members in court, so labour disputes end up being fought with individual rather than collective strategies, which are rarely effective.

The second major justification for closing down the Industrial Relations Court is the failure of broader justice sector reform. After major changes were made in the early reform era, many assumed that court reform was complete. Nothing could be further from the truth, however, and serious challenges remain.

Although the Industrial Relations Dispute Resolution Law states that industrial relations disputes should be resolved quickly, accurately, fairly and cheaply, this is seldom the case. Dispute resolution typically involves a process that progresses from bipartite negotiations to mediation, trial at the Industrial Relations Court, cassation appeal to the Supreme Court, and then a reconsideration hearing (PK) before a final and legally binding decision is made. All of this can take up to 10 years.

What’s worse, the process is not cheap. Many Industrial Relations Courts impose court fees on workers, even though this is not allowed under the 2004 Industrial Relations Dispute Resolution Law.

The location of the courts in provincial capitals also disadvantages workers who live in regional areas. They must cough up their own funds for travel and accommodation to attend hearings. This is no small matter, given that, on average, every case tried in the court requires 8-15 hearings. Consider, too, that any document submitted as evidence must be sealed with a duty sticker (meterai) costing Rp 6,000. This might be a small sum but the many documents required mean costs can mount quickly.

Another unresolved problem is judicial corruption. This has become so bad that dispute resolution in the Industrial Relations Court typically only benefits the parties with the means to pay. The case of Onamba Indonesia is one example of this. Judges of the Bandung Industrial Relations Court hearing this case accepted bribes to rule in favour of the firm. Judge Imas Dianasari was eventually arrested by the Corruption Eradication Commission (KPK) but similar stories are far too common.

Before the passage of the Industrial Relations Dispute Resolution Law, the government played a role in dispute resolution through regional and central Labour Dispute Resolution Committees (P4). The involvement of the state can be crucial for protection of workers, as it can help ensure labour disputes are settled fairly, easily, quickly and appropriately. Under Soeharto’s authoritarian regime, however, the P4 Committees were rarely effective, and, like the Industrial Relations Court today, often did little more than defend companies against workers’ claims. But the benefit of having the government involved was that it did have the power to prevent arbitrary dismissal of workers by companies. In the past, companies were required to obtain permission from the government before dismissing employees, and employees could leverage this to win concessions from employers.

Under the 2004 Industrial Relations Dispute Resolution Law, the government is only involved in the mediation mechanism in the Manpower Ministry. But this is a mere formality and government mediators are generally passive. If a mediator issues a recommendation that is not implemented, no action is taken by the government. In practice, mediators’ recommendations are used simply as ‘tickets’ to file lawsuits with the Industrial Relations Court. In other words, the workers essentially have no choice but to proceed to the weak court process, which rarely treats them fairly.

Given these numerous challenges, it is hardly surprising that workers often fare poorly in Industrial Relations Courts. Consequently, many have now given up on the courts entirely, instead seeking justice through other means, such as reporting to national or regional legislatures or the National Human Rights Commission (Komnas HAM), or by conducting mass demonstrations.

The planned revision of the Industrial Relations Dispute Resolution Law must provide a greater role for the state to provide protection and fulfilment of labour rights, as mandated by the Constitution under Article 28I(4). More specifically, the state should regain the power to determine whether employers can dismiss employees. Further, the process of dispute settlement must be made simpler, fees should not be imposed on workers, and the government should litigate on behalf of workers when bipartite negotiations and mediation processes fail.

Despite the problems of the past, the return of the state in the dispute resolution process would offer hope for strengthening the industrial-labour justice system in Indonesia. Even if the state has a poor track record in industrial dispute resolution, anything would be better than the current disastrous system.

Herlambang visited The University of Melbourne from 13 August – 2 September as part of the Faculty of Arts Indonesia Initiative.

Dr Herlambang P Wiratraman is a lecturer and executive director of the Centre for the Study of Human Rights Law at the Faculty of Law, Airlangga University. He is also chair of the Indonesian Lecturers Association for Human Rights (SEPAHAM Indonesia, 2014-2017) and previously served as head of the Indonesian Association of Legal Philosophy (AFHI, 2013-2014).